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If you own a business that could benefit from a work facility especially designed to meet your company’s needs, you may have considered demolishing a building at an ideal location and then constructing a new headquarters or manufacturing plant from the ground up. Sometimes, small businesses need to decide if moving into a dated facility -- which may need extensive renovations -- is more cost effective than destroying the building, and that decision can only be made if you have a reasonable estimate of demolition costs.

Location-based Costs

Whether you’re looking to tear down a commercial or residential building, demolition costs can vary widely, depending on where you’re located. Generally, demolition costs are less expensive in the South and Midwest, whereas they tend to be more expensive in states on the East and West coasts. Also, keep in mind that some cities prefer to discourage building demolition in favor of rehab, so they charge a significantly higher amount for a demolition permit.

The demolition cost of a building is usually tied to its square footage. The national average for commercial demolition is usually pegged at $4 to $8 per square foot, so you can get a rough idea of the costs associated with demolition by multiplying the square footage by a dollar amount in that range. Keep in mind that the cost per square foot can decrease as the square footage goes up, so you can save on larger projects, and that the national average for tearing down a commercial building is typically pegged at around $30,500.

Special Circumstances Affecting Costs

Once you consider the national averages and adjust your thinking based on location, you should factor in any special circumstances that may raise the cost of demolition. If the building contains asbestos or any other hazardous materials, it may cost an additional $2 to $3 per square foot to remove the hazardous material.

Demolition permits are an additional expense. On average, a demolition permit can cost around $200, but that fee can be as high as $10,000 or more, if you’re in a city that discourages demolition. Another expense added to the total cost of demolition is disposal costs to haul debris to a landfill. These costs vary depending on the type of debris, such as wood, concrete, plaster or metal, and how far away the building site is from the closest disposal facility.

Included and Excluded Costs

Then, keep in mind that the technical definition of demolition is the complete tearing down of a structure to its foundation. Consequently, a demolition estimate may or may not include the destruction of the current building’s foundation. If you have a project that requires a new foundation, you may have to up your estimate of the total cost for demolition.

Typically, the quote from your demolition contractor handles the entire demolition process, including permits and debris removal, but it’s helpful to know upfront how much those items add to your number crunching, based on national averages. You can even try to defray the costs outlined in a demolition bid by handling part of the project yourself, such as debris removal. Calling around to dumpster or hauling companies for a good deal can make a difference in your overall budget.

Tip

Take your asbestos-free materials, after the demolition, to a recycling plant. You can recover a small portion of the money you spent on demolition costs.

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About the Author

Terry Masters has been writing for law firms, corporations and nonprofit organizations since 1995, specializing in business topics, personal finance, taxation, nonprofit issues, and general legal and marketing content creation for the Internet. Terry holds a Juris Doctor and a Bachelor of Science in business administration with a minor in finance.

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Masters, Terry. "How to Determine Building Demolition Costs." Small Business - Chron.com, http://smallbusiness.chron.com/determine-building-demolition-costs-15447.html. 29 June 2018.

Masters, Terry. (2018, June 29). How to Determine Building Demolition Costs. Small Business - Chron.com. Retrieved from http://smallbusiness.chron.com/determine-building-demolition-costs-15447.html